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515 Litllc Canada Road, Lillie Canada, MN 55117-1600 <br />(651) 766 -4029 / FAX: (651.)'766 -4048 <br />www.d.1thle-canada.rnn.us <br />MEMORANDUM <br />TO: Mayor Blesener & Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: August 4, 2011 <br />RE: Graba Loan Update <br />MAYOR <br />13111 Blescner <br />COUNCIL <br />RIek Montour <br />John Keis <br />Michael McGraw <br />Shelly Boss <br />ADMINISTRATOR <br />Joel R. Hanson <br />Last year we authorized a loan to Graba Properties LLC of about $212,000. This loan <br />was to enable the developer to complete build -outs of the remaining space. One of the <br />tenants to be attracted was Neato Scan. This past spring we revised the loan terms to <br />allow Neato Scan to occupy less square footage while also enabling the addition of a <br />7,000 square foot thrift store and expansion of the Athlete Lab space. <br />The Developers have obtained estimates for the work needed and discovered they are <br />short on the money needed to complete the build outs. As you recall, they had about <br />$100,000 to use for completion of the buildouts. With accrued interest on the costs <br />already advance, that leaves them about $94,000. Their estimated buildouts costs are <br />$127,000 (see attached spreadsheet). Therefore, they are short about $33,000 plus any <br />costs associated with modifying their loan (legal, title, etc.). It should also be noted that <br />the Developer is not taking any fees in managing this project as part of the estimated <br />costs. <br />The Tax Increment financing Law that allowed us to finance this venture was extended <br />during this past legislative session. We may need to hold another hearing to modify the <br />loan. I have asked Ruler's & Associates to verify the process we need to follow. I have <br />also attached their information sheet on the program we are utilizing. <br />Having just received the detailed information, staff is still completing their analysis of the <br />financial impacts. however a quick review shows a positive cash Clow of about $4,500 <br />per month is generated. The building value has been reduced by Ramsey County from <br />$3,377,000 to $2,400,000 so our loan to value ratio will he reduced well below 80 %. <br />I3ob Wagner will be present at Wednesday's meeting to discuss this further. The <br />question for the Council is do we want to authorize an additional loan amount of between <br />$33,000 and $40,000 to enable the buildouts to be completed, subject to satisfactory <br />financial review? <br />1 <br />